HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

ECONOMIC DEVELOPMENT COMMITTEE

Ms. Diana Whalen (Chairman)

Dr. John Hamm

Mr. Mark Parent

Mr. Gary Hines

Mr. Howard Epstein

Mr. Charles Parker

Ms. Marilyn More

Mr. Wayne Gaudet

Mr. Harold Theriault

[Ms. Diana Whalen was replaced by Mr. Stephen McNeil.]

[Ms. Marilyn More was replaced by Ms. Joan Massey.]

IN ATTENDANCE:

Mrs. Darlene Henry

Legislative Committee Clerk

WITNESSES

Pork Nova Scotia

Mr. Martin Porskamp

Chairman

Mr. Dennis Boudreau

Vice-Chairman

Mr. Henry Vissers

Executive Manager

HALIFAX, TUESDAY, MAY 2, 2006

STANDING COMMITTEE ON ECONOMIC DEVELOPMENT

9:00 A.M.

CHAIRMAN

Ms. Diana Whalen

MR. MARK PARENT (Chairman): If I could call the meeting to order, please and thank you. We have a few more people who will be coming from the other caucuses, but I think we should get started. As is our custom, I'm going to go around the table and ask people to introduce themselves. I hope you don't mind, as chairman, since we are talking about agriculture, I handed out these little brochures about Agrifest, which is going on again this year. Our first one was two years ago and, if you missed it, you missed a real treat. It is the highlight of agriculture in Nova Scotia. I'm sure the pork people will be at that and promoting Pork Nova Scotia there.

So we'll start on my left and just go around and introduce ourselves. We will then ask you, Martin, if you don't mind - are you the lead-off speaker?

MR. MARTIN PORSKAMP: Yes.

MR. CHAIRMAN: So we'll ask you to introduce the people who are with you and then turn it over to you.

[The committee members and witnesses introduced themselves.]

MR. PORSKAMP: Thank you very much. You all have a report in front of you and I guess I will just basically go through that to begin.

Pork Nova Scotia appreciates the opportunity to address the Standing Committee on Economic Development with concerns and current events of the pork industry. Pork Nova Scotia thanks the committee for the invitation and we hope that we can work together to sustain a healthy pork industry in Nova Scotia. Pork Nova Scotia is a marketing agent for hogs in Nova Scotia and is mandated to carry out the purchase of sale of hogs in this province through the Natural Products Marketing Act.

The mission of Pork Nova Scotia is "To create the most favorable environment possible for the production and marketing of pork in Nova Scotia and to assist in maximizing returns for the Nova Scotia producers."

The competitiveness of the pork industry in Nova Scotia and its ability to continue to contribute substantially to economic and social progress in the Province of Nova Scotia are affiliated with a strong commitment both from within the industry and from government.

The pork industry is a fundamental component of the rural community. It is a major creator of wealth in jobs in Nova Scotia and can be one of the key platforms of Nova Scotia's agricultural economic growth. The future development of the pork industry is of major interest to a wide range of Nova Scotians as a major contributor to employment and economic development. Pork producers in the province produce over $30 million in hog sales at farm level, and an economic impact on the province's economy of over $100 million.

The pork sector makes an important contribution to the economy in the area of employment. At least 1,500 people in Nova Scotia obtain full-time work because of the $100 million worth of economic activity that the hog industry generates and the bulk of this, mainly agricultural employment, is concentrated in rural communities.

The pork industry in Nova Scotia is not just producers, there is a whole infrastructure of industry that benefits from hog production in Nova Scotia, from towns like Berwick that rely on the industry for jobs, a tax base and business for the town, to the feed and equipment companies that rely on the industry for an important part of their business activity. Just as a side note, for the Town of Berwick, their tax base that they collect from Larsen's and a few others, they collect over $560,000 a year from that one plant alone. So it's a major contributor to the tax base of that community.

If we look at the benefits of this economic activity, a recent agricultural impact study shows that 61 per cent of farm expenditures are made within 40 kilometres of the farm. The same study shows that 91 per cent is spent in Nova Scotia, and only 7.7 per cent outside the province. This means that of the $31.5 million in farm gate sales from Nova Scotia hog farms, $29 million was spent right here.

Another example is the tax contribution of the average industry employee. They receive an estimated $15 an hour, plus benefits. This translates into $27,300 per year, and from this amount the provincial tax is $1,764. The province also receives 8 per cent of the HST on all the purchases made with this take-home pay, which is approximately $1,500. This makes a net tax benefit to the Province of Nova Scotia from the pork industry employees of about $3,264 per employee per year. Since the Nova Scotia hog industry employs around 1,500 people on farms and related industries, this means the provincial payroll and HST benefit to Nova Scotia from these employees is around $4.9 million.

The federal sum is even greater, with a federal payroll tax of $3,064, plus their portion of HST of $1,400, for the federal tax benefit from the Nova Scotia pork industry of $4,464 per person, or $6.7 million per year from the industry. Total federal and provincial tax collected from the people who work in the Nova Scotia pork industry is around $11.8 million per year. Those are a few of the spinoffs the industry creates as far as direct taxes to governments and so on.

The price situation. One of the most frustrating things that Nova Scotia pork producers face is the fact that we have no control over our price. Over the past few years our industry was hit by a number of factors outside our control that have negatively impacted our price. Currency, BSE, and U.S.-Canada oversupplies of pork have all pushed down the price producers have received. We are projecting prices below the cost of production for 2006 and at least a portion of 2007.

The following challenges list some of the causes for this difficult situation - and there's a bit of a graph there where you can see what the price has done and what the projections are going to be.

The policies of the federal government are focused on exports. Since we are not an export industry this increases the price and trade risk of Nova Scotia producers without any of the benefits associated with access to these markets. Nova Scotia pork producers produce only about 60 per cent of what Nova Scotians consume; the national drive to export means that our price is based on the export of hogs. This means that at any time the Canadian dollar changes or a North American surplus causes the U.S. price of pork to change, or a disease- related issue causes a border to close, we take a loss even though there's no surplus of pork in Nova Scotia and the province is still a net importer of pork.

One of the major changes in our price is caused by the increase in the value of the Canadian dollar. Since 2003 we have seen a major increase in the currency value, which meant that while our U.S. counterparts were enjoying profitable sales we were still at or below the cost of production. Since January 2002, the loonie has gained more than 40 per cent against the American dollar. Even though the pork industry in Nova Scotia is local

and should not be affected, this change has had a major impact on the Nova Scotia hog industry. Our costs are based in Nova Scotia, but our prices are set in Iowa.

For example, when the Canadian dollar is valued at 65 cents, Nova Scotia producers' price would be $1.70 per kilogram. At the current value of 89 cents, that same hog is $1.30 per kilogram. On a per-hog basis, this amounts to a difference of around $39 per hog. This is the difference between profit and loss for our producers.

A number of producers in Nova Scotia are also suffering from a major disease outbreak, Post-weaning Multi-systemic Wasting Syndrome, or PMWS. PMWS is harmless to humans, but is of major economic importance to the pork industry. The disease affects young, growing pigs causing severe wasting and, in over 80 per cent of cases, death. First recognized in Canada in 1991, and retrospectively diagnosed from tissue samples dating back to 1985, the disease now has been reported in over 20 countries worldwide, from North America to Asia and Europe.

Nova Scotia producers and veterinarians have reported losses of 20 per cent to 50 per cent during the peak of an outbreak; this has a devastating effect on production and can cost the larger farms between $50,000 to $75,000 per year during an outbreak.

[9:15 a.m.]

MR. CHAIRMAN: Martin, could I just interject for a second. We usually allow about 10 minutes for presentation. You're coming up to that time. Is it possible to summarize the next sections?

MR. PORSKAMP: Certainly, yes. I just wanted to go through a case, the case is the Canadian Agriculture Income Stabilization Program. I think most of you are familiar or have heard of it. It has been a program that has been tough for us to work with. It's based on margin, or the change in margin. If you're constantly at a low margin, eventually you don't get a payout anymore, and also because of the diversity of the Nova Scotia producer, that kind of eliminates the fluctuation in margin and, because of that, the payouts are much lower here. The program just doesn't work for our region, I guess, and that has to be looked at and we would like to be changed.

Programs. There have been a number of programs, of course, and we are very appreciative of the programs. Of course, the Department of Agriculture recently announced further support to the industry of $1 million followed by an announcement of another $1.8 million for 2006. These loans are not just for the pork producers, but they also help support and maintain the whole infrastructure of the industry. Most of this money goes right out to pay bills and so on. So it does come to the producer, but it's just out the door again the next day. Those kinds of support programs are great, but we need

to establish one that we can depend on for maybe longer than a year at a time, or six months at a time, and so on, as we need to do some planning too.

The renewal process. In co-operation with the Department of Agriculture, Nova Scotia initiated a planning process in June 2004. It's a strategic planning process for the industry, and a steering committee was developed to look at all the stakeholders in the industry and to consult with them to see what they knew of the industry and what they thought could be done. It was quite a long and drawn-out process. We did get it all done. All the sectors were consulted, including processors, producers, feed companies, lenders, government and retailers. It provided important insight of how stakeholders viewed the strategic issues facing a Nova Scotia industry.

Everybody knew that we had a problem at the producer level. No one really knew how to tackle it and no one really was willing to change their pricing structure for their product whether it was feed, or retail, or wholesale. They were saying, yes, we know you're in trouble, but we can't pay any more for your product or inputs can't be sold to you any less.

So, anyway, we did that whole process, and now because of that, we have hired on a development officer who was to look at ways we can possibly change the course of the industry. That has been done. We're in the process now of looking at markets to try to change the industry to steer it in a different direction to maybe get some more money into producers' hands.

Industry transition options. Nova Scotia producers are not the only agricultural sector in trouble in Nova Scotia. We believe that Nova Scotia must take a look at a different model for agriculture for the area. As stated in the Kelso Consulting report to the Nova Scotia Federation of Agriculture at a meeting, entitled Industry Transition Options to Maintain a Competitive Nova Scotia Agriculture Sector, all of Nova Scotia's food-based commodities are being challenged by the increasing globalization of the food system. While some agricultural commodities, particularly those that have established price-setting mechanisms, are able to position their sectors for a positive return on investment, others, for a variety of reasons, are unable to assert their position on the food chain. That's the problem we've been having. Anyway, their report is almost complete and will be presented very shortly. I'll just go through this summary piece.

We believe that Nova Scotians want to support local agriculture and recognize the value of a safe, secure and local food supply. In order for this to continue, three key areas need to be addressed immediately:

• Nova Scotia Department of Agriculture continues to provide interim support to the industry while we undertake this renewal
• [Page 6]
• process by providing support payment to the industry up to the trigger formula established for the hog program.

• Replace the CAIS Program with a program more in tune with the needs of Nova Scotian farmers, which can be used as a base for provincial initiatives.

• While this interim report is in place, establish a program to deal with price fluctuations in the marketplace, i.e., industry transition models.

This is an investment in the economic strength of rural Nova Scotia, and at the end of this process we will have an industry that has renewed itself, has modernized, and is sustainable.

MR. CHAIRMAN: Thank you very much, Martin, I appreciate that. There will be an opportunity for the others to participate as we go through a round of questions. I want to welcome two members who joined us after the initial round of welcomes: Charlie Parker, Pictou West, and Junior Theriault, Digby-Annapolis.

We welcome the two of them, and we're going to start with questions from Joan Massey.

MS. JOAN MASSEY: Thank you, Mr. Chairman. I'm actually filling in for a colleague of mine. She handed me the binder for this meeting about a week ago - this binder - and I also happen to have the binder, with all my notes and questions and what have you, from when the organization was in, in 2004. This is this morning's and this is from 2004, and your opening statement is exactly the same, word for word. I'd have to compare the rest, but there's a lot of it that is the same material I'm assuming.

Things have not gotten better; things have gotten worse for the industry in Nova Scotia. I think you probably ran out of time in your presentation because I think it is a really important issue that is definitely affecting you in rural Nova Scotia, your families, and the businesses that operate in those rural areas. It also affects people in urban areas, because anything that happens economically in any part of the province is going to affect us all. When we lose families that can't support themselves because of what's happening in the industry, it's a problem for us. The problem seems to be growing in Nova Scotia. I found it interesting, the connection between Larsen's and trying to provide them with the product that they need and the conflict there, so maybe I can get you to elaborate on that later.

I'm really interested in hearing you talk a little bit more about your "renewal process", as you called it this morning, but really that's your strategic plan that you

outlined in 2004. I'm really concerned or interested in how far that has come along - how closely is the government working with you with that strategic plan in that framework? You were saying this morning that you hired a development officer to look at some new ways of doing business, to look at markets, and steering the industry in a different direction. If you can sort of touch on some of those issues for me, that would be helpful.

Also, if somebody can talk about how this is affecting - you don't have to talk personally about it, but how it is affecting families in rural Nova Scotia, down to the nitty- gritty. What is it doing to families, what is it doing to them? Are people closing up shop? How much are people suffering? How is it affecting their daily lives and the lives of their children? I'll leave you to maybe try to address some of my questions.

MR. PORSKAMP: Maybe Henry can go over how we're going on with this strategic plan, sort of a quick outline as to where we are, where we plan to be and so on.

MR. HENRY VISSERS: The planning process ended last September. We delivered the report to the then Minister of Agriculture and Fisheries, Chris d'Entremont. One of the key pieces to that was the renewal process, which we've since undertaken. We were longer than we had anticipated finding someone to fill the role of business development officer. The person we were looking for, of course, needed some experience with not necessarily the pork industry but certainly with industry and someone who had some of those connections already established, because we needed somebody to actually hit the ground running rather than learn the job as they were going along.

That person was hired last month, Murray Gouin. He was the general manager of Taste of Nova Scotia for a number of years, and had been involved in various industries. He worked for Scotsburn Dairy at one point, and those sorts of organizations. So he had a good background in the type of industry we're in. He has been working on this full-time for the last month. We're encouraged by his progress, but of course I can't tell you that we have it solved yet. It's not a simple process.

The solutions that we're looking at, of course, when we're talking about renewal, are longer term. For example, if we were looking at a situation where we would need to change the genetics of the hog that's marketed a bit to meet a particular market, then first we need to research that. Then we need to actually find some producers that are willing to participate in something like that, if there's a niche market that would like to buy that type of product. Then we actually have to have some pigs born so that we can test that to see whether or not we have the right carcass characteristics.

Just to get that sample number of hogs to do that would take us a year, because by the time we do all that and the hogs are born, raised and go to market, it basically takes a year. Then we have a sample. If it's successful, then we can say let's move forward, and use those genetics to try to develop that brand and develop that market. If

it needs to be configured a bit, then it's going to take longer yet. So, as you can tell, that sort of process can take quite a period of time. He has started on it. He's working on trying to create some alliances with packers and retailers, and also the institutional trade, restaurants and those sorts of things. We're trying to find a place where we can niche product for certain producers. So that's the thrust of where he's going with those sorts of things.

As far as the state of the industry, you're right, some of the issues have changed somewhat over the past few years. We're talking about the CAIS Program rather than the NISA program as far as a safety net program goes. We're still talking about federal policy driving the agenda rather than a Nova Scotia policy. Those issues haven't changed much. The big change that we've seen over the past number of years is the increasing drive to export pork from Canada.

We're at the level now that over 50 per cent of the hogs produced in Canada are exported. As Martin mentioned in the report, that's a real negative for the Nova Scotia industry because we are a domestic industry. We don't gain anything from those exports, but we certainly are at risk for what we've seen happen. One of the things we've seen happen is the change in currency. That's probably, from all indications, a long-term issue that we're going to be dealing with.

The whole of the Canadian industry is certainly going to be dealing with the increased value of the currency. When you look at some of the larger pork companies' financial statements, they all mention that. They all mention losing markets in Japan, because they can't compete against the U.S. dollar because of the increased value of our currency. We're not in Japan, but we're suffering from those same currency fluctuations simply because of how our price is established. That is a fairly major change from the last report, those currency issues.

A couple of years ago when we were here we were marketing between 210,000 and 215,000 hogs a year. Our projection is that we'll be marketing 180,000 this year. That's the net effect of the struggle the industry has been going through and the changes in the global market for pork compared to our costs of production here. It begins to concern us, when the numbers drop like that, where we go when we don't have enough critical mass to supply our customers and keep those plants operating, and where is the tipping point as far as efficiencies in plants and being able to maintain production and maintain workers.

[9:30 a.m.]

We had a meeting in Berwick a week ago called by the producers down there, and a couple representatives from the Larsen's union were there and they were concerned because there are not enough hogs going into that plant and they're losing hours. Often

people are coming to work on Friday and there's no work because there weren't enough hogs going into that plant that week. So that whole infrastructure eventually will be at risk. I would only be guessing if I said where the tipping point is, but you can be sure there is one somewhere.

MS. MASSEY: So at some point you're just not going to have enough product to keep these plants going?

MR. VISSERS: That's what happens eventually, yes.

MS. MASSEY: So one of the goals I read was a 100 per cent goal of locally produced pork products?

MR. VISSERS: Yes.

MS. MASSEY: That goal is just out of grasp right now?

MR. VISSERS: Well, it definitely is unless there's a complete change in the structure of the industry.

MS. MASSEY: Because, I mean what you see on the news is that in fact the government stepped in a couple of times with some emergency funding, let's call it, but what I'm really trying to get at is where are they on board with you as far as long-term answers to the problem and long-term goals for economic development - and this is part of it - for rural Nova Scotia? So I guess that's sort of where I think everybody is going. Thank you.

MR. CHAIRMAN: Thank you very much. Did you want to respond to that, Henry?

MR. VISSERS: Well, I can just say the department staff have been working with us. They were a part of this planning process and they're still working with us as far as working with the development officer and looking at different ways to renew the industry. It's a daunting task for everyone, not just producers, but we recognize the difficulty that the province has in balancing support for the industry, and what it costs to provide that support, and looking for solutions that would sustain the industry long term. That's, of course, the difficulty.

MR. CHAIRMAN: We'll now turn to Stephen McNeil.

MR. STEPHEN MCNEIL: Thank you, Mr. Chairman, and thank you for coming in and making your presentation.

Last November when the province announced an investment of $1 million to help cover the shortfall and the cost of production, it was alluded to at that meeting - and it wasn't in the announcement, but it certainly was alluded to in that meeting that there would be some money forthcoming this year to deal with the long-term strategic framework, and the number bandied around was $1.8 million which just so happened to be the same number that was announced a few weeks ago to cover the cost of production. Maybe you could just talk to me about that - was there some talk that there would be $1.8 million coming this fiscal year to help deal with that strategic framework that you have in place, or no?

MR. PORSKAMP: I guess the way I understand it, I don't know, it came early in the last fiscal year. I don't think it was made really clear that that was the same as the one that was for the following year, which a lot of people assumed it was. We have requested additional funds to move us up to the trigger point, and up to this point we've had no response or a negative response, I guess you could say - I don't know how you want to put that exactly. We've got a meeting requested with the minister, of course, to talk to him further on that, just to clarify things and so on.

MR. VISSERS: Following the planning process, when we originally approached government and asked them for support over the next couple of years to keep the industry going, of course we were looking at what prices were doing at that time. As you can see in the report, the price tanked a lot worse than we had expected it to. It was our intention to continue to operate the program that we had been operating to support the industry, which basically gave producers - the trigger point that Martin is referring to, we take the full cost of production for hog, we subtract the owner's labour part of that and we subtract a further $10, which was considered operator risk, and then that amount, which is basically cost less $17 a hog, is what we were topping producers up to, and that's the trigger formula that Martin is talking about. We felt at the time that we made the request last Fall that we would be able to continue to operate this program with those funds, which amounted to $10 a hog. Of course, not being able to predict the markets better than anyone else, apparently, the price was a lot worse than we thought and the funds that we used for that certainly didn't last as long as it did.

MR. MCNEIL: Just so I'm clear, the 1.8 that was announced recently, it was your understanding that that would be announced next year in the fiscal year to look toward a long-term strategic development. That money now has been pulled forward. You're not sure whether that is the same 1.8, or whether it was an additional investment of money that the government found?

MR. VISSERS: None of the correspondence that we have had made that clear one way or another.

MR. MCNEIL: Okay. Of course the dollar has gone up again since this announcement. How long is this 1.8 going to last?

MR. VISSERS: The end of May.

MR. MCNEIL: Has there been any discussion with government about what happens on May 31^st?

MR. VISSERS: We made the request to support producers up to that trigger formula that I outlined. The response we received from Minister Chisholm was that the funds that we have received from him were all that he could provide.

MR. MCNEIL: You had mentioned at one point, I think at the high in Nova Scotia we were producing 220,000 hogs. Is that right?

MR. VISSERS: Yes.

MR. MCNEIL: We're now down to about 180,000, you said? What is the industry's projection for next year and the year after, at the currents rates?

MR. VISSERS: There is no doubt that we'll have a reduction in numbers next year. Where, would be a guess. Before the year closed last year, we surveyed producers and asked what their marketing intentions were for the year, and that's where we came up with the number of 180,000. We'll do the same thing again next Fall. Unless things change, my assumption would be the numbers will be down.

MR. MCNEIL: One of the challenges that I think everyone has in understanding the issue, is when you say that as an industry you produce 61 per cent of the pork consumed in the province. From a consumer's perspective, when I think about that, they're saying, well, what's the problem? They look at that and they say, they're doing 61 per cent of what we actually consume, there should be no problem. There should be a market, should be able sell it, try to get a handle on the fact that the price is set somewhere else. I'm wondering, what is the relationship and how do you see the relationship affecting your industry between the retail sector and the producer in Atlantic Canada, and the fact, quite frankly, that we have a monopoly?

MR. PORSKAMP: I guess there is no relationship between the retailer and the producer, and that's one thing that has to be worked on. We need more of that, knowing what the next guy is doing up the chain, not across, because we all know what we're doing as producers. There is no relationship at all between retail price and producer price. Nothing. As far as I can tell.

MR. MCNEIL: I guess that leads into this. The dollar goes up, the price per hog drops. The retail price stays the same. Let's say, what would you be getting per hog today, $130?

MR. DENNIS BOUDREAU: It's $125.

MR. MCNEIL: Let's take that same hog into Larsens and divide it up and put all the cuts in it that we would like and we ship it out the door to a retailer, what is that hog worth then?

MR. VISSERS: It seems to stay fairly constant at retail, for whatever reason. The last time I looked at it, it was about $5.88 a kilo. We're getting $1.30.

MR. PORSKAMP: It's $1.30 right now.

MR. MCNEIL: There's quite a gap between those two numbers and . . .

MR. PORSKAMP: Quite a gap, yes and I don't know, the industry is in between, so it's unfair for me to say that he's getting a lot and he's getting too much, I just don't know, but there is quite a gap there, true.

MR. MCNEIL: And is part of this strategic framework that you're putting in place to deal with that particular issue and how - I mean, when I look at this, not just in the pork industry, I look at it across a lot of commodities in the agriculture industry and it's not a question of whether or not consumers are paying enough. Consumers are paying, I would say, a fair dollar. The question is how do you distribute that dollar properly. When the price drops through the floor, as it is right now in the pork industry, it's staying stable at the retail end. Well, that doesn't make sense; on a very basic level that doesn't make sense to anybody.

MR. VISSERS: Yes, agreed. Certainly the history of it is there was a time when the processor would be making out really well and the producer would be losing money, and then there was another time that the producer was making good money and the processor wasn't, and the retail stayed fairly constant. They'll tell you that pork is inelastic, that consumers will buy an amount of pork per week regardless of whether the price fluctuates up or down - so therefore the price doesn't fluctuate, but they leave it exactly the same and the processor and the producer kind of duke it out for whatever the price is going to be in the marketplace. Because of the changes in some of the things that have happened over the past few years, there have been times that the processor hasn't been making much money and the producer hasn't been making much money either. So there are some changes there, too.

MR. MCNEIL: I'll come back to that later perhaps. I would just like to make a comment on the CAIS Program. It's something that I agree with and I don't think it just deals with the pork industry, I think it deals with the agricultural industry in Nova Scotia when it has not dealt with the fact of a mixed-farm operation. It seems like the federal programs are geared towards a single-commodity, larger farms in western Canada and not taking into the fact that most of our operations are mixed. You had suggested a "made in Nova Scotia" solution. Could you just expand on that a bit?

MR. VISSERS: Want to take that one, Dennis?

MR. PORSKAMP: Dennis is our CAIS man here.

MR. BOUDREAU: Well, the way I've looked at it - but then, you know we don't like to rob this government or taxpayers of money, but the reality is that if we think agriculture is important to this province, we need a "made in Nova Scotia" program that can take care of the farming community. Then the spinoff will be there. Now, if you look at and study very well the ASRA Program in Quebec and you look at what Quebec agriculture has done to that province, it's unbelievable. Quebec makes sure that Quebec survives, and in Nova Scotia if we want the agriculture community to survive here for the next 25 years, we have to look at the program.

Maybe we don't have the economics in this province as a government to make that work, but let's cut it short and go 80 per cent to that - we could live maybe not as good as Quebec, but we can't live with what we have today. There needs to be a change; we can't operate, in Nova Scotia agriculture, in an environment where we're geared for trade, but we can't get the benefits of it. If there's a countervailing duty, for one example, because let's say we export pigs to the States, it could cost us $10 or $20 a pig, and we'll have to pay that here, but we get no benefit. So there's almost nothing that we gain on all these export markets in Nova Scotia - we have to re-look and we just can't do it all ourselves, we have to get together.

MR. CHAIRMAN: We'll come back to you in round two.

Charlie Parker.

MR. CHARLES PARKER: Thank you, Mr. Chairman. Good morning, gentlemen. It's an interesting topic for sure and I guess certainly one that's a bit dear to my heart. I guess having grown up on a family farm in Pictou County, I had some experience with hogs over the years. Things have changed I guess since then, but back in those days we had free-range pigs out of the buildings and into the fields, and I guess we raised a number of sows and always had our own boar and a number of litters every year. Today, of course, it's a whole different story, isn't it? Although there are still some

people who raise a hog or two on their own just to fatten them up for their own production.

[9:45 a.m.]

I guess the first question I want to ask, Dennis, you mentioned the Province of Quebec, what is it that Quebec is doing right that perhaps we're not doing here in Nova Scotia? What is it that we could emulate by what they're doing there?

MR. BOUDREAU: When you look at the programs that Quebec has, here in Nova Scotia - it's not really a secret - anything that government will do to try to help us we have to be very careful because it will affect our national CAIS Program. With everything, you have to kind of always go around the fence, and this is not the proper way to go. In Quebec, if negotiated, their deal - and everybody's aware they're a powerhouse in Canada.

If we're to stay alive in this province we have to stand up and say this is what we need to survive. Their program, they have CAIS and whatever, and the ASRA Program is a cost of production formula. The farmer's union in Quebec figures that every commodity on the yearly base what it cost to produce there, and they support their farmers to this level, but they have to be part of this CAIS Program. All provincial and national programs that are in place and the farm refuses to take the program, that will be netted out of their payment. So everything is geared up, you have to be a 100 per cent player or you're not going to be a part of the whole game.

You go to Quebec - lately there have been a few disease challenges, there are challenges everywhere. Like this CAIS Program, we have a great challenge, it is made to a five-year average, you throw the best year you had in five years, on margin, you throw the worse and then you're left with three mediocre. The problem we have in the CAIS Program, and it's starting to be across Canada, is that the mediocre is three bad years. You can't take an average of three bad years and hope to collect something, it doesn't work. We have a lot, even in the room here, there are a lot of Nova Scotia producers that their average is gone so bad that you almost have to go broke before you collect that first CAIS dollar, so there's no program.

MR. PARKER: I know the CAIS Program has been a real problem not only in the hog industry but right across the whole agricultural sector. I continue to hear about problems from producers. Not only that the program has not been working well, but just how to get those darn forms filled out and to get it figured out, it's very complicated. If it's based on your average and your average has been poor over the last number of years, how do you collect? It is a problem.

Anyway, it just seems like Quebec always has a reputation of doing very well for their farmers. I'm sure there are lessons to be learned there for the Nova Scotia government that could also assist our producers here in this province whether it's in the hog industry or other sectors.

I want to come back to marketing and try to figure out how it is that you can get a better share of the dollar that's eventually sold. My colleague mentioned in the stores that it's selling for close to $6 a kilogram or whatever, but you're not getting perhaps your fair share of that dollar. I noticed out of the mad cow problems in the beef industry there's a whole lot more direct farm marketing in that industry. I've seen in the lamb industry, they have a co-op and they are able to do some direct marketing, or working with Sobeys and Superstore on a pretty close basis. What are your ideas on how you can get a bigger share of that retail dollar? That's really the key, if you can get more money then you can survive.

MR. PORSKAMP: It's a tough one, and that's why we are where we are, I guess. If it was an easy solution it probably would have come up and been implemented a while ago. There's always a place for direct marketing. A good example is Jim Lamb, with his meat store in Berwick. He moves a fair amount of product through that. On a good week, he's moving 30 hogs a week through that one. We've got about 3,000 hogs in Nova Scotia to sell or 3,500?

MR. VISSERS: About 3,500.

MR. PORSKAMP: If we could get some more of that. The bulk of the product is still moved through Sobeys and those big retailers, no question, but there's always a spot for the little guy - I call him little, but in proportion to the big picture a relatively small amount can be moved in these outlets. They have to be looked at and they have to be expanded upon, and moved too. There's no one answer to this whole problem to fix this thing - we're not going to find that there's one magic bullet that's going to solve this whole industry. It's going to take time.

We were at a Value Chain Conference in Dartmouth a few weeks ago, where you are closer linked all the way up the chain from the consumer right down to the producer, and if we can work in that kind of atmosphere - we know what the other guy wants, know when they want it, this kind of stuff, and if it's a particular product, let us know and we can provide it and maybe get a few more pennies a pound for it or something, these kinds of things.

It's becoming more popular now in Europe. They've been struggling with this kind of thing maybe a few years longer than us, but they realized it a bit quicker too. I'm not sure, but they have - I don't know what you want to call it really - like a chain going where the producer is more closely tied to the processor and the retailer, and if money

is to be made, they all make it, and if money is to be lost, they all lose it, that kind of thing. Those are things that are going to have to be looked at.

But they take time, and that's the thing. We are going to be looking at those types of things, but in the meantime we'd like to be there when they do come around - whether it's a year or two years down the road. That's where we need the government to step in and help until that comes around.

MR. PARKER: You mentioned earlier you have about $125 as your average carcass price coming back to you, and I think it had been a bit lower than that not too long ago - $113 I think I heard. What is your break-even point per carcass? What would you need?

MR. PORSKAMP: Break-even point. Well, the formula right now - Henry, if you take the feed aspect and all the rest of it, it's . . .

MR. VISSERS: I think, all costs, somewhere around $170 a hog, $172.

MR. PARKER: So if you get $172, you're at least not losing money.

MR. VISSERS: That $172 would allow for depreciation and income for the operator.

MR. PARKER: Okay, you're surviving. The stats I have here, in the retail level that same hog sells for $462, so you're only getting about one-third, or less, of the price at the moment. Again, it looks like you're not getting your fair share of the dollar out of the product you're producing. That's the question - how do you get a higher percentage of that to break even or to make a little? A big challenge, for sure.

Do I have time, Mr. Chairman, I just want to ask . . .

MR. CHAIRMAN: Two more minutes.

MR. PARKER: Okay. As I mentioned earlier, in Pictou County, the industry has changed. There's not a single producer there any longer. I think the Toney River hybrid hog farm was about the last to go out of business, and that was just recently. The industry is concentrated primarily in Kings County, but I understand it's in Lunenburg, Digby, some other counties - can you tell me where else in the province besides Kings County?

MR. PORSKAMP: Mainly Kings County and in the Concession area, I'd say those were the two biggest pockets. There are a few others scattered around.

MR. BOUDREAU: In the Truro area . . .

MR. VISSERS: Yes, in the Truro area, in Pugwash, there's a fairly large producer in Amherst, and quite a concentration in Kings County. The second largest growing area would be down in Dennis' part of the world.

MR. PARKER: Any left in Cape Breton at all?

MR. VISSERS: No.

MR. PARKER: Finally, I guess of the 61 per cent that you're producing here in the province, is 100 per cent of that going into local markets or is some of that exported and some other taken back into the province - or how does that work?

MR. VISSERS: The Canadian export stats show there's a small amount that is being exported, but I believe it's down from previous to 2000, because when the dollar was lower there was more of a chance to export. I know there was one processor to have a ham market developed and there were some hams going down the Eastern Seaboard, but when the dollar changed, then the fun went out of that, I think.

MR. PARKER: So everything you produce here in the province basically is sold in the province.

MR. VISSERS: Almost everything, yes.

MR. PARKER: Okay, thank you.

MR. CHAIRMAN: Thank you very much, Charlie. John Hamm.

DR. JOHN HAMM: Many of my questions have been answered. First of all, thank you for being in to make the presentation. You mentioned one part of what would be a modernization program. You mentioned some genetic changes within the local herd. Is our hog genetically much different from a Quebec hog now?

MR. PORSKAMP: Not much anymore. At one time, the Maritimes, or Nova Scotia in particular, was known to have probably one of the leanest pig in Canada or North America, but as times change, most of the producers in Atlantic Canada, in Canada, are buying from three or four major genetic suppliers. They're also very prominent in the U.S., too. So the genetics, for the most part, are probably not that - but they are different as far as back fat and growth and all the rest of it goes. All across North America now you get a few big genetic suppliers and they do most of that, whereas one time, Nova Scotia had a lot of small purebred breeders who would bring in stock from around and sell boars and gelds to local producers. That has basically gone by the wayside as the industry developed. Now, in Nova Scotia, there is PIC, which is a big

breeding company of genetic pork, for instance, a few others, and that's basically it. They are right across the country.

DR. HAMM: Saturday night, my wife and I had pork tenderloins, and the quality is great. Now, I don't know where it came from. I guess there is a 61 per cent chance it came from a Nova Scotia farmer here today. Anyway, it was particularly good because on the package it said it was enough to serve six. My wife and I ate the whole thing. We did our share Saturday night.

The product is better, because I've been a big pork eater all my life. The quality is very good now, and very consistent. So some of the things that you're talking about, I think, is evident to the consumer. Maybe it's too early, because part of a strategy is to modernize the industry. Genetic modification is part of a modernization program. What are some of the other elements of a modern industry? Is it bigger farms? Is it the same size farms, more efficient? What exactly are we saying?

MR. PORSKAMP: I think you're right in both cases. Bigger farms, to the point where you can have economies of scale. Labour, for instance, you can get specialized labour in a breeding part of the operation. For instance, if you have a person specializing in breeding or a person specializing in farrowing this out, you can get better production. Over the years, we haven't been able to make enough money to be able to modernize enough. I don't mean you have 2,000 sows and so on, but it would be nice to be able to modernize a 200 or 300 or 400 sow operation to the point where you have some of the modern equipment, the ventilation controls, so the atmosphere is better.

There are environmental issues we all have to comply with, and that costs money. We don't get a return for that with our product at all. Traceability has to be done by everyone, and we don't get paid for that either, or we don't appear to be paid. I mean, we can't say, well, this is a charge for traceability, this is a charge for this, and keep tacking it on. So we have to absorb all those issues, and that's part of our hurt, too.

Modernization, we've talked about the export business, and there are a lot of producers in western Canada and Ontario who are exporting wiener piglets to the U.S., so they can be finished in the U.S.; because of our dollar, they can be finished cheaper in the U.S. So they're doing that, but for us to do that we would have to be able to make up loads of 800, 900 wiener piglets, and there are very few farms in Nova Scotia that can even do that, so we don't have the size to be able to load up a bunch and send them to Iowa or somewhere, wherever that might be.

[10:00 a.m.]

There is an issue there. I don't think we need to have our 5,000 sow operations, but we do need to have enough money to be able to modernize what we have and we

haven't been able to do that. I expect our production may be hurt because of that, but for the most part our production averages in Nova Scotia are quite good as far as piglets per sow per year weaned and so on, and our days to market are good. I don't think we're fully taking advantage of all the technologies out there mainly because we can't afford it right now, or haven't been for the last 10 years.

MR. BOUDREAU: If I could just comment on that aspect. We shouldn't forget with business people, government look at it as big is better. Just one scenario of that aspect is that in western Canada - and it's done in the same scenario in the United States - you get a big farm, 2,000 to 3,000 sow units, whatever. Well, when the first hard time comes around for most of them there's very little government support so they have to close out, they go bankrupt. The reality is, it doesn't disappear, that farm is being sold 50 cents on the dollar, 25 cents on the dollar, so that's where the hurt starts. You can't compete, with 100 per cent of the cost of that money in Nova Scotia, against that big guy out West who has 25 per cent of the cost, you just can't.

DR. HAMM: It wasn't a suggestion, it was a question as to where you figure Nova Scotia's industry would end up with a modernized approach to hog production. The expertise is at that end of the room, not at this end.

MR. VISSERS: I think producers have to start looking at doing things together to take advantage of some of the larger economies to share in the building of a facility so that they can specialize on their own farm. Pork Nova Scotia's goal is to maintain these farms as family farms rather than moving to a corporate structure. The only way to compete with that corporate structure is to co-op on some of the things that they do.

MR. CHAIRMAN: Thank you very much. Mr. Gaudet.

MR. WAYNE GAUDET: Thank you, Mr. Chairman. Welcome to our panel. I just want to start off quickly, in your opening comments you indicated that your price is set in Iowa. Could someone elaborate for me on that one, please?

MR. PORSKAMP: Maybe you could take that one, you deal with that every week, I guess.

MR. VISSERS: A little convoluted, but basically it's a North American price. Our price formula is based on Ontario, the Ontario price is based on the U.S. Department of Agriculture price converted to Canadian dollars. Weekly they take the U.S. price, they convert it to our weights and index, and they convert the Canadian dollar. That becomes the price in Ontario, and in turn that becomes the price in Nova Scotia. We're forced to take that price because if we don't sell our product for that price, then whoever is buying it will find it somewhere else.

MR. GAUDET: Martin, you indicated in your opening comments prices for 2006 and probably for part of 2007, and who knows, I hope it stops going down. When I hear that prices are being projected below cost of production and then I look back at the government funding announcement late last fall - $1.8 million - you indicated the funding will probably run out at the end of this month. I'm trying to understand - I'm hearing from some of the producers from home - how can you expect producers to pay back loans when they're not making money? I'll start off with that. I know it's practically an impossible question to answer but, just for the record, how can we expect hog producers in this province to repay loans when they're not making money?

MR. PORSKAMP: In 2005 - last year, yes - we were paying back loans from the first loan package we got, which was through the Farm Loan Board, and it was sort of like an automatic deduction. Once the price hit so high, the money just went back. So as producers, as individuals, we didn't really have a choice, any of us who were locked into that particular repayment scheme. So even though the prices in 2005 maybe weren't that bad, we didn't get a chance to build up any reserves and so on. So now, of course, in the Fall of 2005, the price has really tanked bad, and all Winter.

Well, you pay back loans and then you don't pay another loan, or you don't pay your feed or something. I mean, I guess you pay back what you feel is the most important and the ones that you don't have any choice on and, you know, those are paid and then you stop paying another person. That's the game you play once you get to that point and it gets really tough. I know a question was asked earlier, how is it affecting families and that gets to be a really tough part of it, you know, who do you pay tomorrow? Do you pay him next month and pay this guy this month? I mean, it's hard. You have to pay the power company or otherwise they'll come and turn your power off. So you've got to pay these kinds of people, but there are inputs that can be put off for awhile without immediate repercussions, I guess. It becomes a game that nobody wants to play, but if the money isn't there, what can you do?

Then people say, well, why don't you get out? Well, if you've got a mortgage at the bank for $2 million, you can get out, but you've still got to pay that back or declare bankruptcy and that's always your last, last, last option it seems. Maybe we should look at that a little bit more, but that's why we're going through this process, you know, we don't want everyone to go through that. So we're hoping we can provide some light and get the industry on a track that's to the road of improvement, and hopefully during that time we can get some help along the way.

MR. GAUDET: I'll come back to that in a minute. I just wanted for the record, Henry, maybe you could indicate to us how many hog producers we have now, maybe looking at the last number of years how many people dropped out. With the forecast that we've just heard, in terms of what the prices look like for the remainder of this year and

probably going into next year, I'm just curious, basically, how many family farms or how many people are still in the business today?

MR. VISSERS: We've got slightly over 60 farms producing hogs. A number of those farms have a number of partners so there's more than one family involved in those operations. So we would estimate that there's probably somewhere around 100 to 120 families that are invested in the hog industry in Nova Scotia. As far as projecting where that's going to go in the next year or so, it would be difficult for me to tell you what the reduction will be, but I can tell you that at least a couple of farms have closed or are in the process of closing now. So we're going to be down a few at least.

MR. GAUDET: How many have closed in the last year, for example?

MR. VISSERS: In the past year, just off the top of my head, probably there's about half a dozen that have actually completely closed up.

MR. PORSKAMP: I was going to say five or six for sure that I can think of right now and they're all numbers that would amount to how many sow - I mean, they weren't all small producers. There were some half-decent sized producers we've probably lost.

MR. VISSERS: Yes, there were a couple of them that - you know, there was one that I can think of, in particular, that had modernized their sow barn not that many years ago and decided that they were going to close out and probably because they were able. As Martin said, in some cases you're just running to stay in place.

MR. GAUDET: I'm hearing that close to 10 per cent left the industry in the last year. Then in your opening comments you were talking about Larsen right now was probably producing somewhere around 180,000 hogs. I'm just wondering, you know, yes, employees' hours are being cut, especially on Fridays, but with less hogs going into the processing plant in Berwick and more hog producers leaving the industry. This whole industry is at risk, and very soon.

I'll go back to the government funding. You indicated you anticipate there's probably enough funding there for maybe until the end of this month. You also indicated you have heard from our Minister of Agriculture indicating there's no more funding. I'm just curious, in terms from the industry, from the producers, what's the plan? What's next? We're not going to wait for the first of June to come in. Is the industry working at some immediate plan right now? You've indicated there aren't too many choices. We can borrow, get a loan to pay the other loan, but, basically, we have 60 that are more than likely struggling to make ends meet. Eventually, some of them will just let go. Enough is enough. I'm curious, from the industry's point of view, is there an emergency plan in the works come the end of May?

MR. VISSERS: For the individual producer, we don't make their plans for them. We've certainly indicated to government what the risks are and what the difficulties are as far as the industry goes. We've been on the tipping point a number of times with this funding situation. We weren't exactly sure when that $1.8 million was going to come until we heard from the minister. We had communicated with producers that we didn't have funds, and told them exactly when we were going to run out of funds. We've certainly kept them informed on what's going on, we've let them know that the funding we have in place will run out by the end of May. So they know that.

Certainly government knows what the situation is in the industry, what the cost of producing a hog is for producers. Of course, individuals will make their decision based on that. That's the best we can do. Certainly, as a board, we never give up as far as trying to support the industry and looking for support while we're going through this whole process.

We've mentioned the longer term and how we're trying to work towards renewing the industry, but, as we've indicated, that is a fairly long process.

MR. GAUDET: One final, quick question. You indicated the break-even point right now to produce a hog is about $172. How much are producers getting per hog right now?

MR. VISSERS: With the marketplace plus what we are able to top them up from support from the province, they are receiving $155 a hog.

MR. GAUDET: Okay, thank you.

MR. CHAIRMAN: Thank you. We'll go on to round two of questions. We'll go to Mr. McNeil.

MR. MCNEIL: Thank you, Mr. Chairman. Just a couple of questions. My colleague, the member for Clare, was just talking about the fact that the money is running out on May 31^st. You indicated that anybody who - maybe I should allow you to say whether this was what you were saying or not - has had the option to get out, got out. Many of the people still in the industry are in it because they've leveraged themselves to the point where they can't get out. How long can they hang on, continue to lose money, without any government assistance?

MR. PORSKAMP: I guess we all do what we can. There are people who are more than one commodity and they're pulling out of the other one when they need to, I suppose. If that's not enough, if you're friends with your banker, that always makes it easier. There is a point when you go in for your bank review and they look at it and they say look, this is the fifth year in a row and your equity is minus now and we're going to have to start charging you more for your operating and so on and so forth.

I don't know why we want to do this to ourselves, but we just keep going and going until we're totally gone. I can't figure it out either, but I'm in the same boat.

[10:15 a.m.]

MR. MCNEIL: Well, I think the answer probably is because it's in your blood. I know the people in the industry, that has been their life, that's what they've done all their life, and probably the generation before them was doing that. But I guess even a friendly banker becomes nasty after awhile.

MR. PORSKAMP: For sure.

MR. MCNEIL: I guess my concern is if many of the people in the industry now are leveraged to the point of no return, so to speak, are we looking at a collapse of this industry in three months, four months? If no government assistance comes along, are we looking at a collapse on July 1^st? I represent a riding in the Valley and we're talking about Larsen's and we're talking about the tipping point. We've gone from 220,000 hogs down to 180,000 and continue to drop, and at some point these large companies are going to start asking the question around the industry in Nova Scotia, period.

My fear is that not only will the hog industry be gone, but I see all the commodities as intertwined, supporting one another - it's the house of cards, quite frankly. One card's gone and the next thing you know the whole industry itself starts collapsing. We have a supply-managed commodity here, but even they're beginning to find pressure on it. I'm wondering, in your estimation, without any government assistance, when do we hit that tipping point?

MR. BOUDREAU: In my opinion, as a farmer, I would guess that so far, if history repeats itself - and you can go from how farmers react after the funds that we have at the present under this loan program from government are depleted - I suspect that within the next month or two, if we still have no answer from government and the Minister of Agriculture, I would suspect that farmers would really think, and I would suspect by the first of July that if there's still no answer, that will start to be the first tipping point of farmers who can easily, or can, get out will start to slip out. Give it another couple of months and I suspect we'll lose about one quarter, or a half more.

There are some enterprises, the newer ones, like Martin said, I think it's fair to say that they are so in debt that possibly their other enterprises will finance that somehow. The other issue is that if we lose more of the killing capacity, more of these hogs in the province, Larsen's will not exist. My problem as a farmer and as a board representative is where do the remaining farmers find a market for their product? That will really hurt because shipping to Quebec is an extra $10 a pig. We can't afford to lose now, can we afford to lose another $10? That will be the final tipping point, that will be

the door closure because you're losing so much - can you afford to lose another $10? I would say without more support it's a ticking clock.

MR. MCNEIL: July 1^st?

MR. BOUDREAU: That would be the start. Farmers don't like to quit easily and it's noted all the time, so it would be July 1^st, and by September there's nothing - it's written on the wall, there would be quite a few less.

MR. MCNEIL: One of the things that has been brought to my attention for the last two and a half years in the entire agriculture industry has been the issue around environmental and farm plans, and the agricultural community in Nova Scotia has been leading the way on their own farms and have been leading the charge, but they're also bearing the cost of all of that and yet the benefit is being borne by all of us. We are, as a greater province, reaping the benefits of that initiative in the leadership shown by the agricultural community.

How much of doing that - is it a direct cost to a producer and farmer? I want to get your view on whether or not perhaps government should be looking at supporting that differently - from an agricultural perspective maybe we should be looking at that, supporting the industry from an environmental perspective, because all of us are reaping the benefit on farm environmental practices.

MR. PORSKAMP: It's a cost and in a lot of cases, in the environmental farm plan for instance, the initial farm visits and so on are being done under a government program and the representatives that come out, it doesn't cost you anything to do that. But, of course, it takes time for the producer to fill out the forms and all that kind of stuff and, for the most part, they don't mind doing that. They do that in the evenings. All the recommendations that come from the plan need to be acted on at some point, and that could cost money.

That's where you start getting into the money side of it. If it's recommended or if they're not recommendations and they have to be done, then they have to be done. Then there are ones that should be done down the road at some point and so on. So depending on how many issues you have on the farm, or on your property, will determine what has to be done right away and what you can push off until later. That's where the cost part comes in. For the most part I don't think we as farmers mind filling in some forms even if it takes a fair amount of work, but it does take work and it takes time away from something else, there's no question. To put a dollar value on it, I haven't really sat down to try to figure out what it has actually cost me personally to do this plan.

But it all costs money. If you're doing that, you can't be doing something else. It's that simple. There is a nutrient management plan that is going to be more important.

That may be required before you can get certain things. That is the same type of thing. It's going to require time and effort and all the rest of it. It benefits everyone, the public and so on. Those are just a few of the issues that we haven't been able to tackle. It's like when the fuel was up, you get a bill from a freight company and a fuel surcharge is on there. We can't put on an environmental surcharge or traceability surcharge and just keep tacking it up. That would be the easy way to do it, but there isn't anything in place so that we can do that.

MR. CHAIRMAN: Joan Massey.

MS. MASSEY: I just can't let this go by, I just have to say it, I'm glad to hear that our former Premier is doing his part for economic development in rural Nova Scotia by eating enough pork to feed six people. (Laughter) I'm not going to go home and do that tonight.

DR. HAMM: I always prepare myself for committees. (Laughter)

MS. MASSEY: I can tell. It's the first time I've been here with you. It just reminds me of something else that happened, when Dr. Hamm was at one of my high schools. I think he was talking about economic development in rural Nova Scotia, and about population decline, more specifically, and talking about some of the Roman tax schemes that they had where if a woman had one child, your taxes were lowered by x amount; if you had two, it went down; and by the time you had I don't know how many, you didn't pay taxes at all. There was a lady sitting beside me, and she said I can't buy into that one at all. (Laughter) I guess we'll eat more pork and have more children. I guess that's the humorous side of it.

In all seriousness, farmers really are a great support to Nova Scotia. They're supporting 10,000 direct and indirect spinoff jobs. It really isn't a laughing matter. The problem is that as those families move out and lose their businesses, the population declines. We lose things that are hard to get back. We lose our schools, our hospitals, gas stations, all those things, corner stores. This is bad for you, it's bad for us, it's bad for tourism. When you drive down, get off the main highway and try to find something, there's not a lot open.

Once they're gone, they're harder to bring back. It's harder to entice families to come back to those areas. There's nothing there for them. What is there for them? Any age group needs community centres. With our aging population we need hospitals. We need care facilities in our own communities. We need some long-term planning. That's why I was trying to really get you to talk a lot about your long-term goals. There needs to be a way to keep our rural families, our farms going in rural Nova Scotia to support our families. We need a homegrown solution.

I'm just hoping - all the best to you in your talks with government as you try to move forward with the issues that you're facing, because it isn't just a rural problem. So I just wanted to sort of make that speech, because I really appreciate what you're doing for the rest of Nova Scotia.

As far as a question, people are starting to ask where does our food come from? I think it's a perfect time for marketing. We're seeing this more and more with product placement in stores. So how do we identify a Nova Scotia product, something that we've grown here, it's homegrown? How do we do that? How can government help you make sure that happens in our stores? We need to brand this as a Nova Scotia product. So I'm just wondering how much information you have on specific marketing ideas.

MR. PORSKAMP: We were just talking on the way down. Dennis and I drove down from New Minas together this morning. We were both at this Value Chain Conference a few weeks ago and most of the speakers were from England, I guess, as it just turns out. One of the neat things, I thought - and I don't know how practical or how easy it can be implemented - a lot of the consumers in Great Britain are requesting or wanting a food-miles sticker on their food which basically tells how far that has travelled until it hit the store, whether it's five or 2,000 or 10,000, or whatever. It's just an - I wouldn't say a gimmick or anything, it's just an - idea. There are some consumers who want to know where the food comes from. They are conscious of the fuel used to get this food here, and they want it to be as low as possible. So whether it's a chain or a region, I don't really know exactly how it went, but they wanted a sticker on all their products that said how far that food has travelled.

MS. MASSEY: That's a really inventive idea.

MR. PORSKAMP: I don't know how easy it would be to implement something like that or enforce it. I don't know how you would do it, then the consumer can decide for himself or herself if you're going to buy a piece of pork that has 10 on it or one that has 3,000, if it's from somewhere else. I don't know if it's practical or doable - well, it must be, because they're doing it there.

MR. CHAIRMAN: Thank you very much. We will turn to Charlie Parker. There are two people who haven't spoken yet, so I'm going to give them a bit more time. Charlie, if you would go for about five, six minutes max.

MR. PARKER: Keep it short, in other words. I will get right to it. I just want to echo the comments of my colleague. Certainly what you're doing in rural Nova Scotia is very valuable to the whole province. You're an important core in Kings Country or Annapolis County or Digby County or wherever, but we're all in this together, whether it's in urban Nova Scotia or rural Nova Scotia. The city offers a lot of amenities and things to rural Nova Scotia and rural Nova Scotia is providing food and tourism

opportunities, so we're in this together, wanting to know that it is a valuable thing, that we have to support our agriculture industry.

I wanted to ask about a couple of stories that were in the newspaper recently. There was a story about a man from, I think, Annapolis County, who had been a pork farmer and then all of a sudden he's had to give up his family farm. He could no longer support the industry, and he struggled financially. No question about it. Then, recently, there was a story about a young couple that was burned out in Kings County. Can you give us an update on that family, or do you know anything further about them?

MR. PORSKAMP: The last family, the Visser family, I think you're talking about, I think it's a bit early yet to know what they're going to do. They're still struggling with the whole incident, I guess, and they're cleaning up and so on. Henry has talked to them. I haven't talked to them personally. I've been away for a bit. I think it's probably too early for him to know what he's going to do, depending on a bunch of things, I guess. It makes it more difficult than it has been, and that's unfortunate because it hasn't been easy from day one, and now he has this on top of that, too. So it's tough, real tough.

[10:30 a.m.]

MR. PARKER: He had insurance on at least some of his buildings or some of his buildings or some of his livestock, I think.

MR. PORSKAMP: Yes, I don't know for sure, but that's what the paper said and that's all I'm going by, yes.

MR. PARKER: I guess the two stories I point out, one went out of business after many years of a family farm, generation after generation, and he felt really bad about losing his grandfather's or his great-grandfather's land. Here is a young family, now, that's faced with a very sudden situation. It's a very stressful industry, no question about it, but when families are in trouble like that, is there any help out there for them? Through your association, is there any type of counselling, or through our health authority, or whatever, is there somewhere they can turn to get help when they have a crisis like that either coming on gradually or just a sudden thing?

MR. VISSERS: Yes, we worked with the federation a couple years ago to develop the farm stress line, and the province puts funding in that as well. There's a toll-free number people can call if they need assistance. The person who answers the phone is a trained psychologist, I think - she'll probably correct me later if she hears this - and she has people she can refer them to if it's financial, or she will help them if it's within her field of profession. It has been a good service. It's something that's well worthwhile, and we appreciate the support from the province to keep that service in place.

MR. PARKER: Do our farmers, in general, use that service when they really need to?

MR. VISSERS: I don't know what the call level is, but I know that it is being used. It's a private referral, so we have no information on who is using the service, but we do know that she is getting a number of calls from the agricultural industry.

MR. PARKER: Do I have time for one more, Mr. Chairman, one quick one?

MR. CHAIRMAN: Very quickly.

MR. PARKER: You mentioned, Henry, the price to make a modest profit, or to cover all your costs and a little bit of income for yourself, I think, was $172 per hog, and right now you're getting $155 with the government subsidy. What is the price you're getting actually from Larsen's without the government subsidy?

MR. VISSERS: Per carcass, I believe . . .

MR. BOUDREAU: About $120, $122, $125.

MR. PARKER: About $122.

MR. BOUDREAU: That's right.

MR. VISSERS: It changes weekly.

MR. PORSKAMP: It changes weekly, the price.

MR. PARKER: Approximately a $32 subsidy, at this time, is it?

MR. PORSKAMP: At this point.

MR. PARKER: Okay, I just wanted to get that for information.

MR. BOUDREAU: If I may, I would just like to point out that in the Visser family, I think it's very important to know that if the industry was healthy and there was a real solid program to keep the industry going, the Visser family is a real example of young farmers at work, there would be a brand new farm there tomorrow. There's a lot in their pot if they decided they really want it. It's tough, because that's what they want to do, but can they really rebuild and afford to keep on going?

MR. PARKER: It's a big decision for them.

MR. BOUDREAU: So I would just like to point out that that's reality.

MR. PARKER: Thank you.

MR. CHAIRMAN: Thank you very much. Gary Hines.

MR. GARY HINES: Thank you, Mr. Chairman. Just a question surrounding the family who lost their farm by fire. There was a suggestion in the paper that the hogs that did survive would not be marketable because of smoke inhalation. Is that just to stymie public perception? In the mad cow industry my understanding was they wiped out whole herds and some wiped out whole countries, of that animal. It really was not something that affected humans who may consume that meat, but they did it mostly for public perception, that they were controlling that. So is there science that states that the smoke does cause the pork to be tainted to the point that it couldn't be marketable, or that those hogs will have to be destroyed?

MR. VISSERS: It wasn't that it would have harmed the meat itself, it was the health of the animal itself that was causing the concern. Those animals were in that barn for a couple of hours under really smoky conditions, and after they did get them out, there was enough smoke damage to their respiratory system that they weren't able to survive.

MR. HINES: Moving on to a different topic. I grew up on a farm and I can remember that it was always a constant struggle to keep your head above water, financially, on the family farm. I mean this is generational. Seemingly, that hasn't changed; in fact, it may be enhanced to a degree. We, as politicians, are always faced with the public opinion to prop up agriculture, fisheries - if you want to use the term "prop up" - is wrong. Personally, I don't think it is. I think we produce 60 per cent of the food in our province, we produce a good quality product, but there's something wrong with the message that's out there with the public. It's yes, it's all right for us to support you people and others in the industry. That message is not getting out there and it's not getting out there because we, regardless of Party, play politics with the issue.

In other words, your business case may not meet the Nova Scotia Business Inc. requirement. However, under Economic Development, if we give out grants or funding, or whatever it may be, then regardless of political affiliation we will rise and use that to make a political football out of it and we will take your business case and exercise it in the streets - I think it's time we had a "come to Jesus meeting" with all politicians where we sit down and realize we have an industry that provides 60 per cent of our food, good healthy food, and that we stop playing politics with it and find a solution and work with you to get that solution. Do you want to comment on that?

MR. VISSERS: I can comment, and I think Dennis wants to as well. I think probably the difficulty we have and that most agriculture has is the ad hoc nature of support we receive. We're appreciative of the assistance, but it is managing from crisis to crisis. What we would prefer is a longer-term solution that looks at things we spoke about in the document - looking at the Quebec model, having a bilateral agreement with the federal government that the case money that comes to Nova Scotia is used as a base to support the industry and the province is allowed to develop programs to enhance that, rather than having it clawed back dollar for dollar. That would be an important step towards helping the agricultural industry in Nova Scotia be sustainable long term.

MR. HINES: I think you're on the right track when you say you're preparing the business case. I don't think you should sell yourself short in bringing that business case forward. What you need is what you should ask for, and then perhaps we can sell it to the public that, yes, we're going to assist our food production industry in the Province of Nova Scotia. I think we, at all political levels, have to support that. I think the public out there needs to get the message too, that there's good product on your table, we're going to produce it locally. The spinoffs throughout the industry and throughout other industries more than compensate what we need to do to assist your industry.

That piece has to be out there to the public, that yes, it's all right. Thank you.

MR. BOUDREAU: If I may comment on his comments?

MR. CHAIRMAN: Yes, please do.

MR. BOUDREAU: One great aspect of this is for government to get involved. I think when they issue an announcement of $1 million or $2 million to the pork industry, they should have the guts to say this is for the good of rural Nova Scotia and all the places.

The consumer on the street - I don't want to be sarcastic - on average they think a pig farm can run the same as a lumber mill, J.D. Irving. You can't shut a pig farm tomorrow and start it up next Spring or next Winter; it just can't be done. The public has to acknowledge that. There's a price to pay to have this around and I think it would be a good place for government, at their next announcement - hopefully they'll have some money - they will talk about this, because the public has to be aware. We, as farmers, can tell them and tell them, but they just don't believe us. Somebody else has to get on board and help us and show the general public that we're here. If we start back tomorrow, and we're shut down, it takes a year to have a pig back in Sobeys - and if we don't put it there, it'll be one from Iowa or Brandon that someone else subsidized.

I think it should be clear; it would be a great help.

MR. CHAIRMAN: Thank you.

Mr. Gaudet.

MR. GAUDET: I have a couple of quick questions, one that I've been often asked, and I know Dennis knows exactly where this question is coming from - from a hog producer from Concession.

I want to return to the price hog producers receive for their hogs. If the break-even point is $172 and right now producers are getting about $155 - that's with the subsidy - why aren't they being provided with the break-even point? Right now, basically what I'm hearing is it's costing us $172 to break even but we're only getting $155 once it's topped up. We're not making money, there's not enough money at the end of the week to pay back these loans. Why doesn't the price that is currently being paid out reflect the true cost of the cost of production?

MR. PORSKAMP: I guess it's all part of the same problem. We always have to come to government cap in hand and we always try to make a case that is doable for everyone, I guess, and with that we say okay, this is what it costs, the price is down so the producer has to take part of the loss for a bit, and then we'll ask for the rest kind of thing. The price will come back at some point, I hope - it better! - and at that point we can make some money maybe. I guess the eternal optimist - farmers, again.

It's always an issue, we come looking for money and we never quite get what we ask for. It's always a portion thereof, it seems. I guess if we ask for our true cost of production or what the formula will show, we don't think that's a doable thing, maybe that's asking for too much, maybe we won't get it, or something along those lines, which is maybe a flaw on our side. Over the years that's basically the way it has been done.

MR. GAUDET: If I understand this, we don't ask enough and we expect that hog producers will have to take a loss.

MR. PORSKAMP: We expect during a low price that the producer has to take a bit of the loss because that's the nature of the industry, it goes up and down.

MR. GAUDET: Then when we looked at last year, approximately 10 per cent of the producers have left the industry. Looking at the projections for the next little while it doesn't appear to be too rosy. I'm just wondering in your next round of negotiations if that should not be raised as one of the key points.

MR. PORSKAMP: That's a good point, thanks.

MR. GAUDET: I have another question. The same individual has asked me if I had heard - and I'll put the question to you - if the province would be announcing an additional $1.8 million to help the hog industry in the upcoming budget. I'll put the question to you, have there been any talks? This hog producer, I don't know where he got this rumour from but he asked me and I said I had not heard anything. I know I had seen the Premier going around touring the province and making announcements so I can understand why people would jump to some kinds of conclusions like this. I'm just wondering if you heard anything.

MR. PORSKAMP: We have requested for additional funding and we've been told none at this point. That's all we really know.

MR. BOUDREAU: If I may comment on that point. I've been kind of advertising around that the reality is - and the minister acknowledged at the meeting about two weeks ago that he knows we're going to need some more, we just can't survive no matter what. It doesn't matter if they've just given some, they know it's not going to last, it's very short term. It's only smart of our government to put it in their budget and then they can't say in two months well, sorry, boys, it's not a budgeted item, we don't have the money. It's time to step up and plan. We're asked to do planning and they should do some planning too, I think.

MR. GAUDET: I have one last question. In your presentation this morning, in your Summary you indicated, "While this interim support is in place, establish a program to deal with price fluctuations in the marketplace. i.e. The industry transition models." I'm just curious, what are we looking at as far as transition models?

MR. VISSERS: We mentioned on the page before some industry transition options and referred to a document that was produced for the Federation of Agriculture. We've been, ourselves and other commodities, working with the federation to look at different models that would support agriculture in Nova Scotia. The Phase I report was presented at the federation's annual meeting; Phase II involved a survey and a more in-depth look at those models. Kelco Consulting is almost finished with that, and within the next week or two there'll be a report on that and some recommendations on what that would look like.

[10:45 a.m.]

MR. CHAIRMAN: Mr. Theriault.

MR. HAROLD THERIAULT: Thank you, Mr. Chairman. I'm sorry I was late and missed your presentation, but I know where you're coming from. I've been a fisherman all my life and that has always been a struggle, too. I just want to answer a question for you that I think didn't seem to get answered - about why you keep doing

it. I think when you're born and brought up as a food producer, whether you're fishing or whether you're growing, it's a commitment you make to yourself and a commitment you make to this world, because if we all give up fishing and farming there would be some sorry looking shelves around these supermarkets. I think then the eyes would open up - hell is here and gone. So I believe that's why we keep doing it. It's a commitment; we've got to do it. Somebody has to grow food and harvest the food on this earth and you're born and brought up to that and I believe you can't get away from it - no way.

You talked about the hogs going for $5.50 a kilogram at the top . . .

MR. PORSKAMP: That's an average.

MR. THERIAULT: Yes, average. You receive about $1.30 of that, the farmers. That leaves $4.20 for the processor and retailer. Have you ever sat at the table with the processors and retailers, do you know what their profit is coming from this $1.35 a kilogram hog that you're raising? We've done it with fish dealers all our life, we go to the table and try to work out fair shares, everybody take a fair loss, fair gain, whatever comes. It always seems to be the farmer at the table here looking for help. We've never had the retailers in yet, and we've never had the processors in here yet. Can you fill us in on what you know about the two upper groups?

MR. PORSKAMP: Well, we're dealing with not many processors, one major processor and a few smaller ones, and on the retail side it's basically the same. There are two major retailers and it's tough to sit down with them and negotiate or find out too much. They're not going to tell you their business. I mean, you know, that's up front and you know that before you even go in.

The major processor, everybody knows it's Larsen's or Maple Leaf and they're very aggressive in the marketplace and very successful in what they do. They're going to pay as little as they have to pay it seems and, like I said, I don't know their business so I can't really say too much about it. They're up against competition too, I'm sure, but the long and the short of it is they're going to pay us - you know, if they can buy it in Ontario, they will, and they keep telling us that. They say we can't pay any more because, if we do, we won't buy yours and we'll buy it out of Ontario - or wherever, I'm not saying Ontario. The two main retailers, we've talked probably to Co-op which is sort of a third smaller player out there and they're a much easier group to talk to. It's a tough business, retail, and if you're the smaller guy and the two bigger ones are competing against each other, we're the losers in that end, I think.

MR. BOUDREAU: And just as a point of interest, and it's sad to realize - Larsen's has a king symbol on their meat, and they had the best product you could have in this province to buy - leanness, quality, everything, and it's sad to believe that this nation and this country has let a multinational buy that plant, and in reality they could

come and close that plant so all the labels are gone, the quality signs in the stores. They'll bring it from somewhere else, but it won't be a Nova Scotia product. It's sad to imagine that we've all let that happen.

MR. VISSERS: Maple Leaf targets a 12 per cent return on assets and anything that they buy or build they write down in 10 years, they take a 10-year depreciation schedule.

MR. THERIAULT: Do we import any pork from as far away as Argentina?

MR. VISSERS: The majority of what's imported comes out of either Quebec or Ontario as far as from the national plants like Maple Leaf, and you will see in the store shelves that retail product from the U.S., for the most part. There's nothing to stop them from importing from further away. For instance, a Cook's label is a U.S. label.

MR. THERIAULT: Do you think we need to produce more pork or value added, what do we need to do there to compete?

MR. VISSERS: I guess that's part of what we're trying to find out with what we are doing with renewal and things like that. There has been some talk about labelling and branding product and things like that. We, of course, need co-operation from both processor and retailer in order to do some of those things. We have to find a way to make a product that's a little different than the commodity product before we'll be able to actually carry forward with the branding process.

MR. THERIAULT: Thank you.

MR. PORSKAMP: Right now, the price we are paid for our pork is a commodity price, and for us as producers at this end of the country to produce for a commodity price, that can't be done. If you wanted to produce commodity pork, go to Manitoba or Saskatchewan or Iowa and do it there where you have 1,000 acres of grain in your backyard and so on. I think we can have an industry here.

The pork industry is a healthy industry, it's a great industry except the producer part of it is getting the shit kicked out of it. It's a product that moves well, it's a healthy product, the consumers buy it, the processors appear to be doing well, retailers do well on it. It's just our little portion that's getting the raw end of the deal here. It's not an industry that's in decline, it's a good healthy industry, but we aren't, for the most part, getting our fair share of it.

MR. CHAIRMAN: Thank you very much. John Hamm.

DR. HAMM: Thank you, Mr. Chairman. First of all, I want to reassure Joan that my comments about having pork on Saturday night were in preparation for the meeting but the rest was tongue-in-cheek. Even on my best day I can't eat that much. What I was responding to was the whole business about the quality of our herd. Pork is a healthy product, and for somebody who has traditionally eaten pork once a week, the product has gotten better. You mentioned the leanness and the texture and so on, and that's very, very obvious. The issue here is not the quality of the product. I think our Nova Scotia product - and I can speak from long years of experience - has improved, so that's not the issue. Anyway, don't be worrying about my health, Joan.

Seriously, we have to get a long-term strategy. I think that's where the industry can move with government. I think the province has shown an appetite to support the industry, but the department and the minister can only respond to the input that you give them in terms of where the industry must move in order to be competitive over the next number of decades. I think, over the last few years, government has shown an interest in maintaining the industry. The government has been concerned about keeping Larsen's going because - I think, Dennis, it was you who made the point - if we have to spend $10 to ship our hog to Quebec, then they have to ship our hog back here so it appears on the store shelves in Nova Scotia, is not a very efficient way for the Nova Scotia hog producer to continue in the industry. Keeping the volume to Larsen's at a sustainable level, there has to be a part of a strategy, and hopefully that will enter into whatever it is that you can present to government.

My sense of things is that the government will continue to be receptive to whatever it is you provide them with by way of information. I know it has been a struggle, as agriculture continues to struggle in parts of our province, other sectors of agriculture. I believe there is a great value in us being in agriculture. We have to find ways in which we can continue in agriculture - I'm talking about pork, but I'm also talking about some of the other parts of the industry here in Nova Scotia.

Do you have a meeting scheduled with the minister any time soon?

MR. VISSERS: No, we're on the list though. (Laughter)

DR. HAMM: Okay. Thank you for your presentation, it has been very, very helpful.

MR. CHAIRMAN: Thank you. We'll leave one last, quick little question to Stephen McNeil, then I will call on you to close.

MR. MCNEIL: It has been alluded to, or suggested here that perhaps one of the ways out of this is marketing. Marketing a product that you're losing money on is not going to improve the bottom line of any farm in this province. So the only solution seems

to be, how do we address the price the producer is getting? Would that not be a fair assessment? We can market your $130 hog and you're still losing $40 a hog. If you're selling 50 or 70 of them, you're still losing money - you're just losing more.

Unless we address that issue of the price the producer is getting, we're not going to solve this problem.

MR. PORSKAMP: Correct.

MR. VISSERS: We agree.

MR. CHAIRMAN: Thank you. Some of the comments remind me of a comment Eric Rand - Martin, you would know Eric, a newly minted minister at the first country church I ever served in, having served in urban churches - we were talking, sitting around after church and doing a very un-baptistic thing, talking about what we would do if we won $1 million in the lotto. When we all finished talking about buying new houses and cars, Eric smiled and said, I'd just keep on farming until I'd spent the whole $1 million. (Laughter) That was my introduction to the struggles that farmers have.

We'll give you just a few quick minutes to summarize and then we'll close our meeting.

MR. PORSKAMP: I guess in closing, we have a strategic plan in place and we're trying to make some changes to the industry. In hindsight, we should have been at this years ago, of course. But we do have some things in place and I do think we can turn this industry around with help from all partners - government, processing and retail. I think producers are ready for a change, are going to be forced into change. We all hate change, but change has to come.

We appreciate all the help we've gotten from government up to this point. The hardest part I've had with it is that we have always had to fight for it so hard and we never quite get what we need - it's always only up to this point and it's done and then we don't know. It's that uncertainty part that is preventing anybody from thinking about entering the industry or expanding. The average age of the hog industry is in the 50s or more. It's getting old and infrastructure is old. We don't know where it's going so we all have to work together to put a package together that will at least give some indication of what we can expect down the road. That's what we need.

But I do think we can make this thing work. We have a nice industry here, we have to make sure we keep our major plant open because if we lose Larsen's, for instance, then we're almost doomed for sure. We have the basic things and until we get there, we need help and that's where we're looking to government to help us along.

MR. CHAIRMAN: Thank you very much, Martin. Thank you, Henry, thank you, Dennis, and thank you to the committee members for a productive meeting. Our next meeting is May 16^th on the Boat Credit Facility Program. So I'll call now for a motion to adjourn.

MR. GAUDET: So moved.

MR. CHAIRMAN: The meeting is adjourned.

[The committee adjourned at 11:00 a.m.]